Federal Property Management and the 50th Anniversary of the Federal Property and Administrative Services Act

STATEMENT OF DAVID J. BARRAM
ADMINISTRATOR

GENERAL SERVICES ADMINISTRATION
BEFORE THE
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION AND TECHNOLOGY
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
UNITED STATES HOUSE OF REPRESENTATIVES

MAY 4, 1998

Mr. Chairman and Members of the Committee:

I am Dave Barram, Administrator of General Services, and I am pleased to appear before you today to discuss Federal property management and the Federal Property and Administrative Services Act (Property Act) as it approaches its 50th anniversary. I brought with me today Mr. Bob Peck, Commissioner, Public Buildings Service (PBS) and Mr. David Bibb, Deputy Associate Administrator for Real Property, Office of Governmentwide Policy (OGP).

Next year, the Federal Property and Administrative Services Act will have been in existence for 50 years and so will the General Services Administration (GSA). When the Property Act was enacted in 1949, it was the intent of Congress to provide an economical and efficient system for procurement and supply of personal property and non personal services, for the use of personal and real property, and for the disposal of surplus property. After 50 years of experience, we believe the Property Act is fulfilling this intent. Based on the authority outlined in the Property Act, it is GSA's mission to be the Government's central management agency for administrative services. It was also the intent of Congress for GSA to be the centralized management policy and oversight agency and to be a mandatory source of products and services when this would lead to greater efficiency and economy.

Even though there have been numerous amendments since its enactment in 1949, the real property policies and methods outlined by the Property Act have generally remained unchanged and have proven effective. However, our Government is reinventing itself and I am proud to say -- so is GSA. GSA has undergone quite an evolution over the last decade. First, GSA's Federal telecommunication and supply services became more competitive. Mandatory use of these services gave way to providing choice to our customers. This meant that GSA had to compete with private industry and had to become more business-like, flexible and competitive.

The enactment of the Public Buildings Amendments of 1972 was also the impetus to a new way of thinking in the Federal real estate market. The 1972 Amendments to the Property Act enabled GSA to begin operating in a more business-like manner, by establishing the Federal Buildings Fund and by authorizing and directing GSA to charge commercially equivalent user charges (Rent) for the space and services it was furnishing. This particular statutory change was intended to ensure that Congress and the Executive Branch could clearly identify the costs of government space and services being used by each agency and to make these agencies accountable for these costs as part of the administrative costs of their operations. We view this as a significant step towards GSA's conducting itself in a more business-like manner.

The next step in GSA's evolution was brought on by the National Performance Review (NPR) in the early 1990's. GSA again found itself in the middle of an important debate about becoming a provider of choice instead of being the single mandatory provider of real estate services for the Federal government. Our client agencies had long been asking for more flexibility, greater customer focus and better service. With the help of our Committees, our customers and our dedicated employees, the agency has once again answered the challenge of change and is committed to thrilling our customers with innovative operating and policy solutions to meet their needs.

While becoming more customer focused in our real estate services, we also saw the need to separate our policy-making and operational functions. In 1995, GSA created the Office of Governmentwide Policy to consolidate within one office all of GSA's property and procurement-related governmentwide policy-making activities. Even in the area of policy and guidance, GSA is moving from a rigid regulation-driven organization toward working in a collaborative, inclusive manner, building alliances and getting buy-in from other Federal agencies up front. Examples of such collaboration include OGP-sponsored forums, which provide a platform for private industry and Federal agencies to work together to identify, address and resolve concerns surrounding Federal administrative functions.

As a result of this ongoing evolution and continual process improvement, GSA has become a more flexible, service oriented, and cost effective organization. At the same time, we have significantly streamlined our organization. Budgeted fiscal year 1999 employment of 14,000 full-time equivalents (FTE) is almost 31 percent below fiscal year 1993 levels, and is 25,000 FTE below our peak workforce of the early 1970's. We are, in fact, doing more - and doing better - with less. Much of our work today is accomplished through an increased use of private sector commercial contractors.

As you can see, Federal property management has changed dramatically since the inception of the General Services Administration and will continue to evolve. Innovative changes in the Public Buildings Service, policy development by the Office of Governmentwide Policy through interagency collaboration and progressive changes in the Property Act will continue this evolution towards an even more streamlined, competitive GSA.

I would like to talk in more detail about the accomplishments of the Public Buildings Service, the largest Service within GSA and the largest provider of office space to Federal agencies.

Public Buildings Service (PBS)

As I mentioned before, the Public Buildings Service has made significant changes in its real property management role, its operations and processes. Some of the major initiatives that resulted in PBS becoming more competitive include: "Can't Beat GSA Leasing", "Can't Beat GSA Space Alterations", performance measurement and management, a new rent pricing policy and an internal organizational streamlining.

Can't Beat GSA Leasing

As a result of numerous business process reviews prompted by the National Performance Review, GSA simplified its leasing practices, dramatically reducing the time it takes to move into space, while simultaneously increasing savings to taxpayers. "Can't Beat GSA Leasing" offers customer agencies the opportunity to use us as their provider of choice, or to lease space on their own.
In addition, "Can't Beat GSA Leasing" is making government leasing more compatible with private sector leasing practices. We now partner with our customers to ensure that their needs are met and they remain our customers. Wherever feasible, standard forms have been eliminated from the process in order to tailor projects to the specific requirements needs of individual clients. Customers have the opportunity to define their project expectations up front and to stay involved in the process from beginning to end. Whenever possible, we use the Internet to share information with the real estate market as well as our customers.

To ensure that we can continue to meet our customer's expectations GSA for the first time, in fiscal year 1997, contracted with private real estate firms to provide leasing services for Federal Agencies. These contracts will help the Government lease property and deliver a broad range of real estate services.

Through the second quarter fiscal year 1998, 73 task orders were issued under the contract: 44 for full lease acquisition services and 28 for a menu of services, with a total dollar value of $1,082,249. We have been generally satisfied with the work of the contractors and we expect to continue utilizing this contract in the future.

Since GSA offered a choice to our client agencies, I am pleased to report that we only granted 14 lease delegations since the beginning of this program. But, not only are we keeping old customers, we're gaining new ones. Since the start of "Can't Beat GSA Leasing" 20 new customers have asked us to lease a total of approximately 400,000 square feet of space for them.

"Can't Beat GSA Space Alterations"

Motivated by the success of the new leasing practices, GSA instituted another initiative called "Can't Beat GSA Space Alterations." Again we aimed at greater flexibility, streamlined procedures and improved customer service. GSA has been able to reduce the time it takes to perform space alterations by as much as 60% for jobs under $100,000 and we offer our Federal agency customers a 5% refund if the work is not completed on time.

In the "Can't Beat GSA Space Alterations" program, we have likewise become a preferred, rather than a mandatory, provider of remodeling services to our customer agencies. We are winning their business through process improvements that have improved the speed and reduced the cost of their space alteration projects.

We are using multiple award Indefinite Delivery Indefinite Quantity (IDIQ) contracts to get a competitive price from already "on-the-shelf" contractors. When our New England Region tested the IDIQ procurement process against the old process on two similar projects, we found that the IDIQ process took only 53 days versus 218 days for the old process. Other regions have had similar experiences. Our Topeka, Kansas, office turned around a space renovation project for a new U.S. District Court Clerk in just 10 days, including phone service and computers. And by accepting government credit card payments, we have also reduced paperwork for ourselves and for our customers.

Initial reports show that our on-time performance on guaranteed jobs is 93 percent.

Performance Measures

As I noted earlier, PBS is a businesslike organization. We carry out thousands of transactions each year, from lease negotiations to performing reimbursable space alterations for our building tenants, to disposing of surplus real estate. In each of our many activities, we can define the performance measures that tell us and you whether we are performing well.

There are many private- and public-sector organizations doing the same kinds of things we do and we can compare measures and benchmarks with them. It provides us an opportunity to set goals, evaluate our effectiveness and gauge our efficiency. Over the past few years we have developed and are refining our performance measures in conformance with the Government Performance and Results Act (GPRA). We have not completely transitioned to GPRA management, but we are making good progress.

As part of the overall GSA Performance Plan, which you are familiar with, PBS selected 13 key measures to help manage PBS on the national level. These measures include customer satisfaction, cycle time for leases, leasing costs, space alterations (guarantee discounts), and property disposal. In addition, we are developing financial measures, such as overhead costs, to ensure that we are not only doing our job well, but doing it cost effectively. For instance, in the area of repair and alterations we are using a "return of investment" (ROI) measure to determine the financial impact of each repair and alterations project. This use of ROI is similar to the way capital real estate investment decisions are screened in the private sector.

New Rent Pricing Policy

Another major change GSA recently introduced is a pilot project for leased space pricing.

The proposed system is more flexible, dynamic and more customer friendly. It adopts a number of practices from private industry, while retaining the benefit that GSA provides to federal agencies as a result of our market leverage:

? have reduced the number of space classifications from 16 to 4 and most buildings will have only 2 such classifications.
?;br>?encies and GSA sign an Occupancy Agreement which clearly set out Rent rates, and other terms and conditions.
?;br>?nts in buildings we lease will be set simply at the rent we pay the owner plus an administrative fee to cover GSA's costs.
?;br>? lieu of prescriptive regulations, there will be a budget schedule for tenant improvements.
?;br>?lls will be clearer, less complicated and will allow a more meaningful comparison with market rates.
?;br>In addition, we believe that this new system will enable us to provide better rent revenue forecasts and more accurate budget estimates for our tenants. In GSA's future budgets we will consider similar improvements in pricing for our own space.

Organizational Streamlining

While GSA is changing its business processes to operate in a more business- like manner, we also streamlined our internal organization. As you know, we consolidated the Governmentwide property utilization and disposal responsibilities of the former Federal Property Resources Service (FPRS) into the Public Buildings Service and we reorganized PBS to better provide services to our customers. Each of our 11 regions created an organizational structure best suited to their geographic considerations and customer base. In 1997, PBS reorganized its central office operations in Washington. The new National Office is designed to ensure a focus on performance measures, on importing best practices from the private sector and sharing best practices among our regions, on the fiscal bottom line and on value-added activities that headquarters can provide with customers, the Office of Management and Budget (OMB), the Congress, and other outside interests.

In the private sector today, firms are turning to the use of "corporate knowledge centers" to provide faster, better, and more cost-effective service to customers. Our reorganization provided us with the opportunity to implement this concept in PBS. We established Centers of Expertise where, in a time of limited resources, PBS employees lend their support and expertise in specialized areas throughout the country. For example we have a Center of Expertise for Energy efficiency matters in Kansas City and a Center of Expertise for Child Care issues in New York. One of our largest Centers of Expertise, with which this Committee is particularly familiar, is the Center for Property Disposal.

Property Disposal

Property utilization and disposal are important phases of asset management and the Property Act recognizes this fact by providing the Administrator with the authority to promote effective and efficient use of real property by Federal executive agencies and to function as the centralized disposal agent for Federal surplus property.

In furtherance of this role we sponsored an innovative Partnership Survey Program that empowers executive agencies to review agency portfolios for potential release of unneeded property. Significant byproducts of the property utilization program are the identification of candidate relocation properties and candidate Federal properties to participate in the Administration's National Brownfields Partnership which I will further discuss later.

The other asset management role given to GSA under the Property Act is property disposal. Disposals generally consist of either a public benefit discount conveyance or a sale of the property. A public benefit conveyance is one that deeds the property for public use such as for public education, public health or port authority use. A sale could either be a negotiated sale to a public body or a public competitive sale; both of which serve an important role in recovering embedded equity to the benefit of the U.S. Treasury.

As was the case with other parts of GSA, over the past several years, we reengineered the disposal process cutting cycle time and adapting private real estate practices. When enacting the Property Act, Congress recognized the value of a coordinated and systematic process for screening and disposing of all types of surplus Federal property. Within the scope of the Property Act's disposal authority, the range and types of surplus property are considerable. On a Governmentwide basis, GSA is involved in disposal actions ranging from releases of small easements, to conveyances of large, historically-significant properties like Governors Island in New York. And except for some special, legislated conveyances outside of the Property Act, the process is basically the same for all property types.

As mentioned earlier, the Property Disposal Center of Expertise is also involved in the Administration's National Brownfields Partnership, instituted for public and private sector organizations to jointly assist communities with environmental clean up and a coordinated approach to redevelopment. Brownfields are abandoned or underutilized parcels of land in urban areas that may have environmental issues associated with prior industrial or commercial use. While many brownfields do not pose a threat to public health and have potential for new development, they are often overlooked. The goal of the partnership is to empower communities to rapidly assess, safely remediate and reuse brownfields. Under this Brownfields Redevelopment Initiate, GSA is reviewing and identifying under-utilized Federal property. I am very proud of the contributions GSA has made in this effort.

Office of Governmentwide Policy (OGP)

In our policy role for Federal real property asset management, GSA tries to maximize the effective and efficient performance of the real property assets in the Federal inventory.

As I mentioned at the beginning of my testimony, GSA made the important decision to separate the policy-making and operational functions. In doing so, we created the Office of Governmentwide Policy.

OGP develops policies and guidance for real property acquisition, development, management and disposal throughout the Federal Government. OGP's objective is to assist other Federal agencies in ensuring that they acquire, manage and use Federal real property assets to meet their needs economically and efficiently. OGP serves in a collaborative role as an advocate for best practices and fosters Governmentwide dialogue and information exchange regarding key issues and challenges in Federal real estate and Federal workplace environments including teleworking. Using collaboration, partnering and customer involvement, OGP works with Federal agencies to provide them policies, best practice techniques, and management systems to promote good asset management. OGP consults with other national governments, State and local governments, the private real estate industry, professional associations, and the academic community to ensure that the best practices of each are considered in the Federal activities.

The OGP, as one of its early initiatives, developed the first set of goals and principles for the management of the Federal real property portfolio. Issued in October 1996, the Federal Real Property Asset Management Principles serve as a guide and a frame of reference for making sound real property decisions. Covering the real property "life cycle," from asset acquisition to disposal, the principles promote lower costs, incentives to improve property management, and improved efficiency and performance of real property.

In addition, OGP is using the same collaborative approach it used to issue the Asset Management Principles in developing standards, best practices and guidance to implement these principles. For example, OGP recently completed a review of Governmentwide real property disposal policy. The review indicated that most policies are sound, have the proper focus and are consistent in light of Federal government downsizing, resource constraints and reinvented Government. However, the report did indicate that Federal agencies lack incentives to improve real property asset management. In this regard, we are in the process of identifying business-like incentives to promote agency release of unneeded property and improved management of their remaining assets.

OGP is also studying and developing a means of sharing real property information among Federal agencies to optimize the use of real property assets. The pilot Government Real Property Information Sharing (GRPIS) Report conducted in the Seattle area is complete and two additional pilot studies will be conducted to assist in further determining how the GRPIS concept can successfully be employed in other geographic areas. Some of the benefits realized from interagency collaboration in the sharing of real property information include: better asset management decisions, improved agency programmatic decisions, and exchanging solutions to common problems and partnering to advance common needs.

Federal Property and Administrative Services Act (Property Act)

Finally, I would like to address the Federal Property and Administrative Services Act. As I stated in the beginning, the Act is nearly 50 years young, has evolved over time, and has generally proven to be quite effective. But in light of the changes within the Federal Government and within GSA -- namely the move from a mandatory source to a cost effective, preferred provider of goods and services -- the Act may need some changes as well.

GSA is currently reviewing the Act as it relates to GSA's operations and our vision for the future.

Closing

In conclusion, I would like to say that I am proud of GSA's accomplishments over the past 5 decades. Our principal goals are to promote responsible asset management, to compete effectively in the Federal market, to excel at customer service and to anticipate future workplace needs. As we broker change, GSA is a changed place, too. I often say, "This is not your father's GSA," and it is not. This is a different age, and we are functioning more like a private sector competitor, rather than a Government bureaucracy. I am committed to continuing the progress we have made in Federal real property management and I look forward to working with the Committee on this effort.

Mr. Chairman, this concludes my formal statement, and we would be glad to answer any questions.